With the Ethereum Layer 2 scaling ecosystem becoming increasingly competitive, Base’s decline and competition against Arbitrum and zkSync has sparked significant interest in the crypto community. A recent dip in user interaction on Base has resulted in a decrease in the protocol’s revenue and profit, while competitors Arbitrum and zkSync are gaining traction.
A Closer Look at the User Activity
As per data shared by Chris Burniske, Base recorded 74,850 unique daily active addresses on 6th October, a number considerably lower than that of its competitors. In comparison, zkSync topped the active addresses chart with 235,510 unique addresses, while Arbitrum followed closely with 155,070 addresses. Though Base managed to surpass Optimism, which recorded 57,990 active users in the same period, the overall decline is evident.
Decentralized Social Networks: A Contributing Factor
One potential reason for Base’s decline could be the activity on Friend.tech, a decentralized social network operating on the Base network. Despite a recent surge in fees, revenue, and Total Value Locked (TVL), the platform seems to have lost its shine to Stars Arena, a similar social interaction platform on the Avalanche network. This shift appears to have negatively impacted Base’s performance.
Arbitrum and Optimism’s Network Growth
Despite recording impressive active addresses, Arbitrum’s network growth – the number of new addresses created daily – is unimpressive at 940. This suggests a low rate of user adoption over time. A similar situation is observed with Optimism, whose network growth stands at 738, indicating a lack of traction on the OP Mainnet.
On the other hand, despite a significant number of active users, zkSync could not replicate this success in its TVL. The TVL, a measure of the total value of assets locked or staked in a decentralized application (dApp), fell to $120.47 million. This could be due to chains like SyncSwap and Mute.io’s inability to attract sufficient liquidity into the zkSync ecosystem.
The decrease in Base’s active users did not help improve the protocol’s weekly cost over profit. According to Dune Analytics, Base had a weekly revenue of $155,532, with operational costs amounting to $75,921 and a profit of $79,611. Although the network made some gains, the profit was not encouraging, especially when compared to previous weeks.
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For Base to regain its previous performance levels, there needs to be an improvement in network activity. As the competition intensifies, it will be interesting to see how Base fares against Arbitrum and zkSync in the coming weeks.
